Euro Reinstatement on February, 5

The euro is recovering this morning following a sharp sell-off Wednesday afternoon as news broke the European Central Bank would no longer accept Greek bonds in return for funds. Greek borrowing costs jumped and bank shared were hit hard after the central bank pulled the plug on its funding for Greece’s financial sector. Less than two weeks since taking over power in Greece, the Syriza party is staring down the ECB with the euro’s fate in the balance.

Overnight, the Bank of England held its main interest rate at 0.50% and maintained asset purchases in the amount of £375 billion. Helping push the euro higher again is strong German factory orders and new rumors that the Swiss National Bank has again entered the market in an effort to weaken the franc. The EUR/CHF rate jumped to 1.0640, its highest rate since the SNB decided it would no longer cap its currency, as traders around the globe speculate the central bank is back in the market, looking to maintain a new peg centered around 1.05-1.10. The seesaw trade is not a welcome sight for a market that has seen increased volatility in the first five weeks of the new year. Tight trading shall prevail for the next twenty-four hours as global markets wait for the US Jobs report for the month of January.

Economic data was scant during Asian hours as Australian retail sales for December paced markets. Just a few days after the RBA lowered its main rate to 2.25%, it was announced that holiday retail sales missed targets, growing only 0.20% over the same period in 2013 as markets were looking for something closer to +0.40%. The yen is a touch weaker today, assisted by a rise in EUR/JPY amid the renewed SNB speculation. Much stronger December German factory orders is coinciding with intervention rumors to bring the euro back up nearly 1% following Wednesday’s ECB-fueled drop, as the US dollar continues a more broad decline of 1.5% stretching back two weeks now.

The Canadian dollar is on the rise this morning as oil rebounds back toward the psychologically important $50-per-barrel price. Canada, along with the US, will release its January jobs report Friday morning. The Great White North is anticipating a slight decline of 11.3k new jobs, mostly fueled by a reduction in part-time employment. Statistics Canada, which reports the number, is anticipating both the participation and unemployment rate remain firm at 65.7% and 6.7%, respectively. Turning to the US, only 278k Americans filed jobless claims for the first time in the week that just ended. Although this number is 11k more than last week, weekly jobless claims remain at the lowest levels since 2000, adding further speculation that the American labor market continues to strengthen.

In just about twenty-four hours, the US will release its January non-farm payrolls report. The market is anticipating that 252k new jobs were added in the first month of 2015, but as severe snowstorms battered the northeast, it will be interesting to see whether or not that impacted job creation, as it did in 2014. And finally, as this goes to print, the US dollar is seeing a bit of renewed selling as the US trade deficit in December widened sharply to its highest level since mid-2012. Despite lower energy costs, imports rose, which could see a downward revision in 4^th quarter GDP growth.